Biggest Scandals in Industry History

Published B&T – July 2016

No one wants to advertise anymore, it’s not “cool”. Instead we are obsessed with innovation, disruption, technology and the myriad of new “product” offerings generated as a result. After 30 years in the business, you expect to see many changes – progressive changes. But during the past decade the thinking has been anything but progressive. Technology yes, thinking no. Technology has given us many useful tools that theoretically should result in smarter, better outcomes. The trend though has been for technology to be replace thinking, rather than a tool, it is becoming the answer.

Pokémon/Pokestops a Glaring Example.

A recent article in The Australian - “Pokémon has big brands on the run”. It mentions brands such as Woolworths, TAB, Sportsbet, KFC to name a few that have jumped onto the bandwagon. That retailers would want to be a Pokestop, or to try and capture this traffic, is indicative of the madness overwhelming our industry. (How do you say “Pokestop” and keep a straight face?”)

A primary objective of any retail campaign is to “generate incremental qualified traffic”. Two key words “incremental” – that is more of the buggers than usual and “qualified” – people who are in the market to buy now.

A long time ago, businesses learned the hard way that having your store over run by people not there for your product or service was to be avoided at all costs. (For very obvious reasons). But because “everything is different today”, learning from past mistakes has gone out the window.

If I was a client and my agency said “let’s try and capture some of this huge Pokémon crowd,” my response would be “Security will escort you to the rear exit and don’t let the door hit you on your backside on the way out.” But agencies are recommending this rubbish and clients are falling for it.

Today’s marketers are similar to the proverbial Pavlov’s Dog. But instead of salivating at the sound of a bell, they salivate at the huge numbers, whether they are relevant or not.

How social media really stacks up.

This is an on-going issue. No matter how many times the worth of social media to businesses is debunked, the bleeding obvious is ignored. That is not to say advertisers should totally wipe social media and that in some industries, such as fashion, it can be very useful. (Though most fashion brands get more mileage out of the followers of influential people than their own social media platforms).

Yes, billions of people are on social media every day. It is used to start coups, end coups, for political campaigns, for celebrities (real and “wanna bees”) to tell people what they had for breakfast. It has pervaded every aspect of every part of daily life. The problem comes when applying theses massive numbers to brands. I can’t think of a major advertiser who doesn’t have a significant social media team in-house and many also engage the services of specialist firms. It is that Pavlovian response again. 

The problem is that two-thirds of Australians follow no brands at all on social media. Well, one study by The Online Research Unit had it at 65%, but Sensis found only 25% of the population followed brands on social media, leaving 75% who didn’t.

Australians come into contact with thousands of brands a year (some put it as high as 13,000). All of those people in social media agencies and client social media departments, are fighting for one third of the population. To make matters worse, take the average across the total population and it is one brand followed, with a modal point of zero. Yep, only one third of Australians follow any brands on social media. And hence the average number of brands Australians follows is one. (Have some 13,000 brands all fighting to be that the one brand).  In many instances there are more people in the social media team than the number of people their tweets reach.

But that is not how social media research is presented. A very well-known and respected market research company, presented the results on the number of brand Australians follow on social media as:

1 to 3 brands – 46%
4 to 6 brands – 37%
7 to 10 brands – 8%
10+ brands – 9%

Doesn’t look to bad, until you discover that this is the brands followed by the one-third of the population. This is not an isolated case. I am no conspiracy theorist, but the twisting of data to boost the importance of social media is widespread. As Professor Mark Riston surmised in his recent AANA presentation and a point that is lost in all of the hype:

SOCIAL MEDIA is SOCIAL MEDIA

• I have mentioned on a number of occasions, that everyone in the industry should watch this presentation. It is the most honest and accurate appraisal I have ever seen. I have no business or personal relationship with Ritson, having never met the man until after seeing his Montreal talk last year, on which this one is based.

Brands are not welcome. People know brands are born to sell. Brands are businesses, not people, but they are now being anthropomorphised. I find it had to believe that marketers actually believe it when they say “Brands should build a relationship with the consumer before they even need them. When it does come time to purchase, they will select the brand they have a relationship with.” What?

People don’t want relationship with brands. They just want brands and products they can trust. When was the last time you had a deep and meaningful with a vegemite sandwich, cry on the shoulder of your Louis Vuitton handbag, ask your Jack Daniels what they are up to this weekend, debate politics with your Big Mac, ask your Apple laptop to join you for after work drinks – come on people, get serious. This madness has not happened suddenly, it has been a slow, but steady creep into the world of the ridiculous. And Google and Facebook have been there all the way, egging the industry on.

The obsession with social media, well above its importance and influence in advertising is a scandal. But is it corruption, incompetence, or both?

Digital marketing.

What an inane term. Firstly, what does a non-digital marketer do? And secondly, what media isn’t digital? I recently had a discussion with a young marketer who tried to tell me TV is not digital. (FTA first started digital broadcasting in 2001). I would estimate that well over half the people using the term “digital” do not know what it means – he told me that EDM is digital, but TV isn’t. To my comment that the basics haven’t changed, he responded “The consumer is much smarter today, they receive so much content blah, blah, blah.” The theme of a conference he was selling was “The Era of the Customer” or something similar. The fact that every single successful business in the history of commerce had in common outstanding customer service was lost on him.  They are told and remember a series of points, which are then sprouted parrot like, without even a hint of understanding. “Google syndrome” I call it – can give you the answer, but haven’t a clue what it really means.

Facebook and Google are far more effective in their marketing/sales to our industry than traditional media, particular TV, who have done very little to counter the misinformation propagated by Google and Facebook. The three major trade publications, Ad News, B&T and Mumbrella, devote well over half of their content to social and digital – they see their charter as reporting on the “new” and these stories are unfailing positive. On the other hand, editorial and articles on traditional media are almost exclusively negative.

I can remember the early 2000s, everybody wanted to be in “digital marketing.” None of this old fashioned TV or press or radio. That was so last century and being a marketer, or in advertising, meant you had to be up with the latest trends. (The Magpie Profession, as Professor Mark Ritson called it – want the latest shiny “thing”). That is understandable as the internet and “digital” was still new, with many areas of opportunity still open.  Since 2004 onwards, we have had a generation of young marketing and advertising professional being exposed to only a fragmented media landscape and subsequent fragmented experiences – the basics of communications, which apply to all media be it traditional or online, are no longer taught.

It has been the perfect storm, with nature of our industry always looking to the future for answers, the explosion of new disruptive businesses using the internet to develop new business models such as taxi companies without cars (Uber) and hotel/accommodation business without owning any property (Airbnb. Though in most instances the major chains do not own the properties, rather than manage them for investors). Disruption and digital - two words you cannot escape in any business dialogue today. This is not to deny that the internet has radically changed and fragmented the media landscape. But fashion has now over taken function. 

The death of traditional media.

YouTube said “The era of TV dominance will come to an end by the year 2016.” And here is the proof. As of the last quarter of 2015, (Oztam), Australians watched on average 100 hours of video a month. Video being everything bar cinema i.e. TV (pay and subscription), YouTube, digital films, DVD, Apple etc. And what did they watch this video on:

• TV – 85 hours 17 minutes
• Laptop – 8 hours 23 minutes
• Smartphone – 4 hours 18 minutes (How many of you are having friends over the watch the various footy Grand Finals on your smart phone?)
• Tablet – 3 hours 1 minute
• Radio is also doing quite well thank you. And newspapers still reach people in numbers most websites can only dream of. And Bots don’t read newspapers.

The only thing that has died has been clear and objective thinking.

Traditional media is now referred to as Legacy Media. I don’t know who coined the phrase, but a fair bet it came from Google or Facebook. No one seems to notice, or care, they have a huge vested financial interest in denigrating their competition. (And what a great job they have done).

Corruption versus incompetence.

I think that advertising and marketing is similar to all other industries. Mostly comprised of hard working, ethical people. The issue of possible corruption has recently been a major topic due to

• The US ANA report accusing media agencies of taking rebates and additional commissions without the clients’ knowledge.
• Dodgy online metrics. Traditional media is heavily regulated and whether you think that the metrics use to measure TV, radio and press/print performance are past their use by date, they are a hell of a lot more accurate than metrics currently used to measure online media performance. “Views” was sprouted by YouTube and Facebook as a measure to show how far they out performed TV. That was until the definition of a view was clarified and compared to TV ratings (or CPMs for other traditional media). When TV ratings were converted to views, we saw figures in the billions, in some instances many times the world’s total population.
• Comments out of the US and UK, do cast a suspicious light on Australian operations:
  - Jon Mandel, former CEO of Medicom, said in the US in 2015 “Media agencies recommend media that is off strategy or off target if it works for their financial gain.
  - Debbie Morrrison ISBA (UK) “I don’t believe that the media agencies have got the best interest of their clients anymore”.

A colleague, who has been widely regarded as being one the country’s top media strategists for the past 20 plus years, explained the situation to me like this: “If I receive a brief from a client and respond with a print media plan, even though it is by far the most effective way of reaching and impacting their target, I will not get to the end of my presentation.” The client will ask “where is the digital component and why is it not the number 1 choice?”  He went on to say “The clients don’t want to be seen by their peers as old fashioned. They want the latest digital whatever on the schedule. And media agencies are not going to risk losing the business when online media pays 2 to 3 times the commission of traditional media.”

I go back to 1990 when we founded Bond Strohfeldt. The great, but unfortunately late, David Baker was Chairman of AIS (Dentsu media arm) at the time and worked closely with us. I had many a session with David lamenting the very low margins in the media business. I doubt many in the industry today would be aware of this. Digital/online, was like mana from heaven for media agencies. Add to this the incredible influence and power of Google/Facebook and clients’ propensity to want “the latest” in world driven and obsessed by technology (Magpie Mentality), and their cutting and squeezing agency fees since I first joined an agency in 1983 and it is easy to see how we ended up in this situation.

This is not technically corruption, but it could be said financial gain has been placed above objective professional advice. When your revenue is commission based, are you a sales or advice based business. (Think financial planners.)? And of course, media houses have been victims of the tsunami of bullshit that has come with the digital world. 

Another issue that has yet to be addressed is that Google and Facebook are technology companies and as such, are not subject to the legislative constraints traditional media companies must operate under. They are playing to a different and far less constrictive set of rules.

Get back to basics.

The basics of advertising do not change. The problem is they are no longer taught. I agree with Professor Ritson’s observation that 50% of the people in the industry want to reinvent everything and the other 50% have no idea. Harsh but true. I am no longer amazed by the lack of broad understanding of many working in agencies today – they work in mutually exclusive silos, with no idea or interest in the big picture. Integrated communications are a mandatory, but that is difficult to do when you only work on and are interested in social or EDM.

Clients are responsible for a brief that clearly and properly defines:

• Objectives (Three golden words “End in Mind”. Often lost in all of the complicated rhetoric. In many instances, the objective is reaching some KPI that has no relevance to the overall advertising or marketing objective. The mutually exclusive silos again).
• Target market (And not just something like Millennials. They are not a segment. There is a massive variance in the types and behaviours of people in similar age groups. Behaviour is far more important than age).
• Positioning (Yes, people still purchase on the basis of WIIFM, What’s in it for me?).

Then work out how to best way reach them. Forget about artificial divides between digital and traditional media. Consumers jump seamlessly from one to the other and we need to as well.

Media Neutrality and Zero Base budgeting are both referred to by Ritson, but they are not new. Don’t pre-allocate money to “social”, “digital”, “EDM”, “traditional” etc. Define your target and then, without any preconceived ideas, work out the most effective way of reaching them. (And look at qualitative factors, not just the quantitative. Splitting media from creative has been hugely detrimental for this.)

Sounds too simple? Well another old catch phrase that is still relevant KISS (Keep it Simple Stupid). Too often, layers of complexity have been added for no benefit, but do remove transparency.

Ultimately, the objective of marketing is to ensure long term positive cash flow. And advertising is but one of the tools available to help achieve this objective. This basic objective is being lost as marketers and advertisers introduce obscure KPIs that have little, if any, relation to achieving this objective. (Likes, impressions, views, followers etc.